Emergent BioSolutions (EBS) FY 2025 Conference September 04, 2025 03:00 PM ET Speaker1Hello, and thank you all for coming, and welcome to the Emergent BioSolutions fireside chat here at the Wells Fargo Healthcare Conference. My name is Jason Ellis. I'm a Managing Director on our biopharma investment banking team, and it's my pleasure to have with me today Joe Papa, Chief Executive Officer of Emergent BioSolutions. Joe, great to have you.Speaker0Thank you, Jason. Glad to be here with you. Good afternoon, eve ...

Core Viewpoint - Emergent BioSolutions Inc. has received a $30 million contract modification from BARDA to supply the CYFENDUS anthrax vaccine, with deliveries expected to start this year and conclude by March 2026 [1][2]. Group 1: Contract Details - The new contract modification is part of an ongoing collaboration with the U.S. government to ensure the availability of medical countermeasures against anthrax [2]. - This follows a previous contract modification of $50 million announced in December 2024 for the same vaccine [3]. Group 2: Product Information - CYFENDUS is indicated for post-exposure prophylaxis of anthrax disease in individuals aged 18 to 65 when administered with recommended antibacterial drugs [4]. - The vaccine was approved by the U.S. FDA in July 2023 for post-exposure use [2]. Group 3: Safety and Efficacy - The efficacy of CYFENDUS for post-exposure prophylaxis is based on studies in animal models of inhalational anthrax [4]. - Important safety information includes contraindications for individuals with a history of severe allergic reactions to the vaccine or its components [5].

Core Viewpoint - Emergent BioSolutions is re-launching its Ready to Rescue campaign to raise awareness about opioid emergencies and promote the use of NARCAN Nasal Spray among college students, particularly in light of International Overdose Awareness Day [1][5]. Group 1: Campaign Details - The Ready to Rescue campaign will focus on educating young adults about opioid emergencies through events at colleges, particularly targeting Greek Life, wellness services, and athletic departments [1][3]. - Emmitt Smith and Zac Clark will lead discussions to destigmatize opioid poisonings and encourage students to be prepared to use NARCAN Nasal Spray [1][3][6]. - The campaign will provide Ready to Rescue kits containing information on recognizing opioid emergencies and demonstrations on how to use NARCAN Nasal Spray [3][4]. Group 2: Opioid Crisis Statistics - Despite a decline in overdose deaths in 2024, the opioid crisis remains a significant issue, with varying responses across states [2]. - Texas, Illinois, Louisiana, and Michigan have been identified as states needing more support for opioid overdose responses [3]. Group 3: Educational Initiatives - The campaign will also sponsor Mobilize Recovery's Campus Surge initiative, which aims to provide overdose education and harm reduction resources to additional college campuses [4][6]. - Less than 15% of American college students are aware of how to administer naloxone, highlighting the need for increased education and resources [4]. Group 4: Company Mission - Emergent BioSolutions is committed to reducing the impact of the opioid crisis and ensuring access to NARCAN Nasal Spray, aiming to protect vulnerable communities like college students [5][9].

Core Insights - Emergent BioSolutions is collaborating with advocacy organizations to raise awareness about the dangers of fentanyl on National Fentanyl Prevention and Awareness Day, emphasizing the need for public education on opioid emergencies [1][2][3] - Synthetic opioids, particularly fentanyl, are responsible for nearly 70% of all overdose deaths in the U.S., highlighting the urgency of addressing this public health crisis [1] - The partnership aims to reduce stigma around opioid poisonings and promote the use of naloxone, a life-saving medication for opioid overdoses [1][3] Company Initiatives - Emergent BioSolutions is committed to public education through its Ready to Rescue initiative, which focuses on combating misinformation about opioid poisonings and encouraging the public to carry naloxone [3] - The company is expanding access to naloxone products, including over-the-counter NARCAN Nasal Spray 4 mg and prescription KLOXXADO Nasal Spray 8 mg, to ensure preparedness in opioid emergencies [3] Industry Context - National Fentanyl Prevention and Awareness Day serves as a platform for various stakeholders, including families, community leaders, and law enforcement, to unite against the fentanyl crisis [2] - The day emphasizes the distribution of naloxone and education on opioid overdose prevention, aiming to protect communities from the risks associated with illicit fentanyl [2]

Group 1: SkyWater Technology - SkyWater Technology has a 12-month stock price forecast of $13.00, indicating a 13.50% upside from the current price of $11.45, based on three analyst ratings [2] - The company reported a significant revenue drop of 37% year-over-year in Q2 2025, leading to widened losses per share, although gross margin improved by 20 basis points to 18.5% [2][3] - The acquisition of Fab 25 from Infineon Technologies is expected to generate at least $300 million in annual revenue and enhance EBITDA, with positive impacts anticipated as early as the current quarter [3][4] - SkyWater's acquisition supports a multi-year supply agreement exceeding $1 billion and positions the company favorably amid U.S. regulations favoring onshore semiconductor manufacturing [4] Group 2: Emergent BioSolutions - Emergent BioSolutions has a 12-month stock price forecast of $14.33, representing a 56.61% upside from the current price of $9.15, based on three analyst ratings [5] - The company experienced mixed results in Q2 but improved EPS significantly, beating expectations by 42 cents per share, driven by strong NARCAN sales and cost optimization strategies [6][7] - Emergent secured a $65 million contract with the Ontario Ministry of Health for NARCAN, contributing to the rapid growth of its international medical countermeasures business [8] Group 3: Backblaze - Backblaze has a 12-month stock price forecast of $10.07, indicating a 32.05% upside from the current price of $7.63, based on seven analyst ratings [9] - The company reported a 16% year-over-year revenue increase and a 29% surge in storage revenue due to rising demand from AI, despite wider-than-expected GAAP losses per share [9][10] - Backblaze's adjusted EBITDA margin is improving, and the successful launch of its B2 OverDrive platform is a positive indicator for future growth [10][11] - The stock has gained over 48% in the past month, with unanimous Buy ratings from all seven analysts and a consensus price target suggesting an additional 31% upside [11]

Group 1 - The article emphasizes the focus on growth and momentum stocks that are reasonably priced and expected to outperform the market in the long term [1] - The S&P 500 and Nasdaq saw significant increases of 367% and 685% respectively from 2009 to 2019, following a recommendation to buy at the bottom of the financial crisis in March 2009 [1] - The goal is to assist investors in making money by investing in high-quality growth stocks [1] Group 2 - The article is intended for informational purposes and does not serve as a solicitation or recommendation to buy or sell stocks [3] - There is a disclosure regarding a beneficial long position in the shares of EBS, indicating a vested interest in the stock mentioned [2] - The article expresses personal opinions and does not guarantee the accuracy of the information or results [3]

Financial Data and Key Metrics Changes - Second quarter revenues reached $141 million, exceeding guidance by $21 million, with year-to-date adjusted EBITDA of $106 million, leading to an increase in 2025 adjusted EBITDA guidance from $150 million to $200 million [6][12][26] - Adjusted net income for the second quarter was $9 million, a significant improvement from a loss of $122 million in the same period of 2024 [13] - Net leverage improved to 1.9 times debt to adjusted EBITDA, down from 9.9 times in 2024 [6][23] Business Line Data and Key Metrics Changes - Total product sales for the second quarter were $126 million, with a notable increase in smallpox revenue offsetting declines in NARCAN and anthrax sales [16][17] - NARCAN sales increased by approximately 50% compared to 2024, indicating a recovery from previous disruptions [18] - Year-to-date total product sales were $328 million, with NARCAN revenue at $113 million and smallpox revenue at $147 million, reflecting strong international demand [21][22] Market Data and Key Metrics Changes - International medical countermeasure (MCM) sales accounted for 40% of revenues year-to-date, highlighting the company's strong position in global markets [8] - The naloxone market is expected to grow in the low to mid single digits, driven by ongoing public health initiatives [28] Company Strategy and Development Direction - The company is focused on strategic investments for long-term growth, operational efficiency, and maintaining market leadership in biodefense and public health sectors [5][10] - Plans include expanding international revenue, enhancing product offerings, and pursuing synergistic external opportunities [24][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenges and capitalize on growth opportunities, particularly in the MCM sector [29][40] - The company anticipates a strong second half of 2025, with revenue guidance narrowed to $765 million to $835 million [26][40] Other Important Information - The company has implemented a $50 million share repurchase program and repurchased 1.1 million shares in the second quarter [9][25] - Total liquidity reached $367 million, significantly improved year-over-year, providing financial flexibility for growth initiatives [22][23] Q&A Session Summary Question: Can you elaborate on NARCAN pricing actions and market growth? - Management indicated that NARCAN pricing has been stable recently, with expected low to mid single-digit growth in market volume due to ongoing opioid overdose issues [45][46][52] Question: Have you seen changes in market demand due to new synthetic opioids? - Management acknowledged concerns about new synthetic opioids and emphasized the importance of making NARCAN widely available to combat overdose risks [56][58] Question: Any updates on the competitive landscape for smallpox antiviral? - Management is optimistic about the potential of their antiviral product, Tambexa, and is actively conducting clinical trials to demonstrate its effectiveness [60][62] Question: Are there additional contract modifications expected in 2025? - Management confirmed expectations for more revenue-generating contract modifications in the second half of the year, building on the seven secured year-to-date [64][66]

Part I. Financial Information [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Unaudited condensed consolidated financial statements for Emergent BioSolutions Inc. as of June 30, 2025, detailing financial position and performance [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$1,417.1 million** due to cash, while liabilities decreased, boosting stockholders' equity Condensed Consolidated Balance Sheet Highlights (in millions) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $267.3 | $99.5 | | Accounts receivable, net | $79.8 | $154.5 | | Inventories, net | $338.6 | $311.7 | | Total current assets | $719.5 | $598.7 | | Total assets | $1,417.1 | $1,389.7 | | **Liabilities & Equity** | | | | Total current liabilities | $127.1 | $162.4 | | Debt | $667.8 | $663.7 | | Total liabilities | $880.9 | $906.9 | | Total stockholders' equity | $536.2 | $482.8 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a significantly reduced net loss in Q2 2025 and achieved net income for H1 2025, primarily due to lower operating expenses Statement of Operations Summary (in millions) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $140.9 | $254.7 | $363.1 | $555.1 | | Income (loss) from operations | $1.6 | $(203.5) | $51.5 | $(163.7) | | Net income (loss) | $(12.0) | $(283.1) | $56.0 | $(274.1) | | Diluted EPS | $(0.22) | $(5.38) | $0.99 | $(5.23) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly improved to **$95.2 million** for H1 2025, leading to a **$165.4 million** increase in total cash Cash Flow Summary - Six Months Ended June 30 (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $95.2 | $(15.1) | | Net cash provided by (used in) investing activities | $76.7 | $(15.4) | | Net cash used in financing activities | $(6.8) | $(10.2) | | **Net change in cash, cash equivalents and restricted cash** | **$165.4** | **$(40.7)** | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes cover the company's business structure, divestitures, restructuring, debt, legal proceedings, and segment re-evaluation - The company completed the sale of its Baltimore-Bayview drug substance manufacturing facility to Syngene for **$36.5 million**, recognizing a pre-tax gain of **$7.9 million**[52](index=52&type=chunk)[53](index=53&type=chunk) - The company has undertaken **multiple organizational restructuring plans** since January 2023 to reduce operating costs, resulting in workforce reductions and facility closures[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk) - Total debt as of June 30, 2025, was **$700.0 million**, consisting of a **$250.0 million** term loan and **$450.0 million** in senior unsecured notes[72](index=72&type=chunk) - The company settled a securities class action lawsuit for **$40.0 million**, of which **$30.0 million** was paid from insurance proceeds[116](index=116&type=chunk) - Effective Q1 2025, the company re-evaluated its structure and now has two reportable segments: **Commercial Products** and **MCM Products**[132](index=132&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance and condition, noting Q2 2025 revenue decline but improved net loss from reduced expenses and strengthened liquidity [Results of Operations](index=46&type=section&id=Results%20of%20Operations) Q2 2025 total revenues fell **45%**, but operating expenses decreased **70%**, leading to operating income, with H1 2025 also showing improved operating results Q2 2025 vs Q2 2024 Performance (in millions) | Metric | Q2 2025 | Q2 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $140.9 | $254.7 | $(113.8) | (45)% | | Commercial Product Sales | $67.5 | $120.0 | $(52.5) | (44)% | | MCM Product Sales | $58.4 | $63.4 | $(5.0) | (8)% | | Total Operating Expenses | $139.3 | $458.2 | $(318.9) | (70)% | | Income (loss) from operations | $1.6 | $(203.5) | $205.1 | 101% | | Net income (loss) | $(12.0) | $(283.1) | $271.1 | 96% | H1 2025 vs H1 2024 Performance (in millions) | Metric | H1 2025 | H1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $363.1 | $555.1 | $(192.0) | (35)% | | Commercial Product Sales | $112.8 | $238.5 | $(125.7) | (53)% | | MCM Product Sales | $215.0 | $218.8 | $(3.8) | (2)% | | Total Operating Expenses | $311.6 | $718.8 | $(407.2) | (57)% | | Income (loss) from operations | $51.5 | $(163.7) | $215.2 | 131% | | Net income (loss) | $56.0 | $(274.1) | $330.1 | 120% | [Reportable Segment Results](index=51&type=section&id=Reportable%20Segment%20Results) Segment results show Commercial Product revenue decline, MCM Products decrease, and 'All other revenues' fall due to a prior-year settlement - Commercial Product segment revenue decreased **44%** in Q2 2025, driven by lower sales of OTC NARCAN and an unfavorable price/volume mix[197](index=197&type=chunk)[198](index=198&type=chunk) - MCM Products segment revenue decreased **8%** in Q2 2025, with a **70%** decrease in Anthrax MCM sales partially offset by a **127%** increase in Smallpox MCM sales due to timing of government orders[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) - Services revenues (part of 'All other revenues') decreased **93%** in Q2 2025, primarily due to a one-time **$50.0 million** arbitration settlement with Janssen recognized in Q2 2024[208](index=208&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=64&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) Liquidity significantly improved with cash increasing to **$267.3 million** and working capital rising, supported by a **$50.0 million** share repurchase program Financial Condition Summary (in millions) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $267.3 | $99.5 | | Total working capital | $592.4 | $436.3 | | Debt | $667.8 | $663.7 | - The company authorized a **$50.0 million** share repurchase program in March 2025, with **$6.9 million** used to repurchase **1.1 million** shares in Q2 2025, leaving **$43.1 million** available[251](index=251&type=chunk) - The company had **$100.0 million** of unused capacity under its Revolving Loans as of June 30, 2025[262](index=262&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=69&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rates on variable-rate debt and foreign currency exchange rate fluctuations - The company's primary market risks are **interest rate risk** on its floating-rate debt and **foreign currency exchange rate risk**[265](index=265&type=chunk) - A hypothetical **1%** increase in the eurocurrency rate as of June 30, 2025, would increase annual interest expense by approximately **$2.5 million**[267](index=267&type=chunk) [Item 4. Controls and Procedures](index=69&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control - Management concluded that disclosure controls and procedures were **effective** as of June 30, 2025[269](index=269&type=chunk) - **No material changes** to internal control over financial reporting occurred during the three months ended June 30, 2025[270](index=270&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=69&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 16 of the financial statements for details on legal proceedings - For information on legal proceedings, the report directs readers to Note 16 of the Condensed Consolidated Financial Statements[271](index=271&type=chunk) [Item 1A. Risk Factors](index=71&type=section&id=Item%201A.%20Risk%20Factors) Updates the company's risk factors, highlighting potential negative impacts from recent divestitures and the 2025 Share Repurchase Program - The company highlights **risks associated with its recent divestitures**, including retained liabilities, potential indemnification obligations, and the possibility of not realizing the full expected benefits from the sales[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk) - There is a **risk that the 2025 Share Repurchase Program may not be fully utilized or may not enhance long-term stockholder value**, and its suspension could negatively impact the stock price[278](index=278&type=chunk)[279](index=279&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=73&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the company's share repurchase activity under the 2025 Share Repurchase Program, including shares repurchased and remaining funds Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 200,000 | $5.01 | | May 2025 | 478,681 | $6.25 | | June 2025 | 441,500 | $6.48 | | **Total** | **1,120,181** | | [Item 5. Other Information](index=74&type=section&id=Item%205.%20Other%20Information) Director Kathryn Zoon adopted a Rule 10b5-1 trading arrangement for the potential sale of **24,286** shares of common stock - On May 16, 2025, Director Kathryn Zoon adopted a Rule 10b5-1 trading plan for the sale of up to **24,286** shares of common stock, expiring May 15, 2026[287](index=287&type=chunk)[288](index=288&type=chunk)

Financial Performance - Q2 2025 revenues reached $141 million, exceeding the high end of guidance by $21 million[14] - Adjusted EBITDA guidance is raised to $175 - $200 million for 2025[14] - Net leverage decreased significantly from 99x in Q2 2024 to 19x in Q2 2025[14] - Cash position improved to $267 million, with liquidity at $367 million, a $297 million increase year-over-year[14] - 11 million shares were repurchased in Q2 2025 for $69 million[16] Business Segments - International MCM sales accounted for 48% of total MCM revenue year-to-date[16,54] - NARCAN demand rebounded by 50% in Q2 2025 compared to Q1 2025[16,57] Future Outlook - Full year 2025 revenue is projected to be in the range of $765 - $835 million[14] - The company is pursuing organic and inorganic growth initiatives to create shareholder value[15,67] - The company plans to invest to enable sustainable, long-term growth[62]

Core Insights - Emergent BioSolutions Inc. reported second quarter 2025 financial results, exceeding revenue guidance by $21 million and improving profitability metrics significantly compared to the previous year [2][5][36] - The company is raising its full-year 2025 profitability guidance, reflecting strong execution of its multi-year transformation plan and sustained demand for its products [2][5] Financial Performance - **Q2 2025 vs. Q2 2024**: - Total revenues decreased by 45% to $140.9 million from $254.7 million - Net loss improved by 96% to $12.0 million from $283.1 million - Adjusted EBITDA increased by 382% to $28.5 million from a loss of $10.1 million [3][5][36] - **Year to Date (YTD) 2025 vs. YTD 2024**: - Total revenues decreased by 35% to $363.1 million from $555.1 million - Net income turned positive at $56.0 million compared to a loss of $274.1 million - Adjusted EBITDA increased by 87% to $106.1 million from $56.8 million [4][36] Revenue Breakdown - **Product Sales**: - Naloxone sales decreased by 44% to $67.5 million, primarily due to lower OTC and Canadian sales - Anthrax MCM revenues decreased by 70% to $11.6 million, affected by sales timing - Smallpox MCM revenues increased by 127% to $40.6 million, driven by higher sales of VIGIV CNJ-016 [8][9][10][12] - **Other Revenues**: - Revenues from services decreased by 93% to $15.0 million, largely due to a one-time arbitration settlement - Revenues from contracts and grants increased by 61% to $10.5 million, attributed to development work related to Ebanga™ [14][15] Operating Expenses - Total operating expenses decreased by 70% to $139.3 million from $458.2 million, driven by significant reductions in costs across various categories [16][17] - Research and development expenses decreased by 62% to $12.5 million, reflecting cost management efforts [19] - Selling, general and administrative expenses decreased by 49% to $43.7 million, due to restructuring initiatives [20] Segment Performance - **Commercial Products**: - Revenues decreased by 44% to $67.5 million, with a gross margin of 32%, down from 48% [24][26] - **MCM Products**: - Revenues decreased by 8% to $58.4 million, with a gross margin of 44%, up from 40% [27][29] Financial Forecast - The company updated its full-year 2025 financial forecast, projecting total revenues between $765 million and $835 million, with net income expected between $40 million and $65 million [36][37]